China Sky One Medical, through its indirect wholly owned subsidiary Harbin Tian Di Ren Medical Science and Technology Company (TDR), consummated a transaction pursuant to an equity transfer agreement with Heilongjiang Haina, licensed as a wholesaler of traditional Chinese medicine, bio-medicines, bio-products, medicinal devices, antibiotics and chemical medicines.
Pursuant to the equity transfer agreement, Harbin acquired 100% of the issued and outstanding capital stock of Haina Pharmaceutical from its three stockholders in consideration for payment of RMB3 million (approximately $428,571). TDR has been overseeing the operations of Haina Pharmaceutical since January 2008 as part of its due diligence prior to closing of this acquisition.
Haina Pharmaceutical does not have an established sales network and was acquired for its primary asset, a good supply practice (GSP) license issued as of December 21, 2006 by the Heilongjiang office of the SFDA, and will expire on January 29, 2012. The SFDA recently started issuing such licenses to resellers of medicines in order to maintain certain quality controls. The GSP license enables China Sky One Medical to expand its sales of medicinal products without having to go through a lengthy license application process.